Research

We present below a few links to global research about outplacement and the relative effectiveness of outplacement programs.

Australian Research

Gribble, LC& Miller, P 2009, ‘Employees in outplacement services, do they really get the help they need?’, Australian Journal of Career Development, vol. 18, no. 3, pp. 18-28. Published version available from: http://www.acer.edu.au/ajcd/

ABSTRACT – Outplacement is often provided by organisations to people when they are retrenched but little is understood about the processes of outplacement, or how retrenchee’s experience it. Further, those who are retrenched are often not researched as they no longer belong to the organisation that pays for the outplacement and the outplacement agencies’ focus is to assist them to find new employment. This paper investigates retrenchee’s experiences with outplacement and finds that their experiences are not always positive and the focus of the experience is on finding new work. While they are offered services other than job seeking skills, these services may not provide what they seek. It concludes by recommending that services be tailored to focus on individual needs based on personal assessment conducted between the retrenchee and outplacement provider.

Research from the US

Issues in Civilian Outplacement Strategies (1996)

A summary of key findings from “Unemployment and Outplacement: Evidence and Insights from an Organizational Psychology Perspective,” Connie R. Wanberg and Leaetta M. Hough and “Reemployment: Labor Market Barriers and Solutions,” by Duane E. Leigh.

It seems evident that outplacement consulting has the potential to be beneficial to both organizations and individuals. The contracting organization receives professional advice on planning and communicating information about their layoffs, and unemployed individuals receive emotional support and assistance with financial, career, and job-seeking issues. Outplacement purports to reduce the impact of unemployment on the individual, speed the process of reemployment, and decrease the likelihood of lawsuits targeting the downsizing organization. Yet the critical reader may wonder to what extent outplacement services have been evaluated regarding their ability to adequately achieve such outcomes.

Summary and Policy Implications

This paper provides an overview of major policy proposals put forward to assist the reemployment of displaced workers, subject to the limitation that the proposals discussed have been or are currently being evaluated. Broadly speaking, these proposals fall into one of two categories: policies to speed up reemployment and policies to replenish lost earnings potential. Self-employment programs, which do not fit comfortably under either heading, are also considered, but the available evidence suggests that relatively few displaced workers are interested in pursuing such programs.

Expediting Reemployment

Among policies intended primarily to expedite reemployment, a great deal of evidence is available on the effectiveness of job search assistance services; and more evidence is forthcoming as net income estimates become available from state profiling programs. This evidence consistently shows that these services are effective in speeding up reemployment. Given their low cost, they are also typically found to be cost-effective. Early intervention with job search assistance is a basic level of services that should be made widely available to displaced workers.

The existing evidence is less favorable for relocation assistance and reemployment bonuses. A reluctance of displaced workers to relocate geographically is found to limit the usefulness of relocation assistance. Early evidence from a reemployment bonus program in Illinois indicated considerable promise that bonuses effectively speed up reemployment by offsetting the incentive of unemployment insurance claimants to delay serious job search until the end of their eligibility. Three subsequent experiments suggest, however, that reemployment bonus plans are no more effective than job search assistance programs, but at much higher cost.

Earnings subsidies have also received recent attention as a policy option that meets the dual objectives of encouraging an earlier return toBottom of Form employment and directing assistance to the displaced workers experiencing the largest earnings losses. The Canadian government is currently implementing an earnings subsidy experiment from which net impact estimates will soon be available. This experiment should help to resolve uncertainties about the labor market effectiveness and cost of earnings subsidy programs.

Replenishing Earnings Potential

Displaced workers found to be in need of skill upgrading in order to compete effectively for jobs in growing industries are usually referred to either classroom training or firm-based training programs. Since the employer shares in the costs, firm-based programs offer the advantage of providing training that will actually be utilized on the job. A large body of evidence using nonexperimental data indicates that there is a substantial labor market payoff to company-provided training. A similar result, but for a very small number of on-the-job training recipients, is also reported for the wage subsidy implemented as part of the New Jersey Unemployment Insurance Reemployment Demonstration.

The major problem with wage subsidy schemes is not that the on-the-job training they encourage is ineffective, but that it is difficult to interest employers in hiring targeted workers. For example, Bishop and Montgomery (1986) report that employer participation rates are extremely low for four targeted wage subsidy programs in operation in the United States through 1980. Rather than the carrot of a wage subsidy, other nations, namely, France and Australia, have experimented with a stick approach of requiring employers to make training expenditures equal to a percentage of their payrolls or to be subject to a payroll training tax (see Leigh, 1995). This approach has been discussed but not implemented in this country.

Results from the displaced worker demonstrations are more mixed for classroom skill training programs. Only the follow-up study of the New Jersey unemployment insurance demonstration focusing specifically on individuals who actually received classroom training services (as distinct from the random sample of all eligible individuals offered it) yields evidence of a positive effect of classroom training above that of job search assistance only. It is worth noting that the short-term, low-cost training provided in New Jersey was designed to upgrade workers’ existing skills rather than to furnish training for a new occupation. In contrast, participants in the Trade Adjustment Assistance program received longer-term training intended to equip them to enter a new occupation or industry. Evaluation results for the program are positive in the sense that the longer-term investments in classroom training allowed the earnings of the trainBottom of Form

ees to reach the level of earnings of a comparison group of displaced workers, most of whom may be presumed to be industry and occupation stayers. (Displaced workers reemployed in the same occupation and industry typically experience smaller earnings losses than occupation and industry switchers.)

On the basis of this evidence, it seems prudent to conclude that classroom training should be limited to carefully selected workers who can be matched with training curricula tailored to their backgrounds and the needs of local employers. A training voucher program appears to be an appropriate policy for allowing selected individuals to exercise freedom of choice in choosing a training curriculum while effectively utilizing the nation’s extensive system of postsecondary educational institutions. Evaluation results will be available in the near future for a voucher-based training program implemented in New Jersey.